02/05/91 SIGAL CONSTRUCTION CORPORATION v. KENNETH

Appeals from the Superior Court of the District of Columbia; Hon. Michael L. Rankin, Trial Judge

Ferren, Belson, and Farrell, Associate Judges.

The opinion of the court was delivered by: Ferren

In this defamation case, a jury awarded appellee, Kenneth S. Stanbury, $370,440 against his former employer, appellant Sigal Construction Corporation. The jury found that a Sigal project manager, Paul Littman, had slandered Stanbury while giving an employment reference to another construction company after Sigal had terminated Stanbury's employment. The trial court denied Sigal's motion for judgment notwithstanding the verdict or for a new trial. The court, however, granted a remittitur ordering Stanbury to accept $250,000 or a new trial for damages. Stanbury accepted the $250,000. Sigal appeals the trial court's denial of its motion for judgment notwithstanding the verdict, claiming: (1) Littman's statements were constitutionally protected opinions, not actionable statements of fact; (2) the statements, even if factual, were protected by a qualified privilege which had not been overcome by clear and convincing evidence showing common law malice; (3) Sigal, in any event, could not be held liable for Littman's statements because he had not made them within the scope of his employment, either as a matter of actual authority -- express or implied -- or as a matter of apparent authority; (4) the court erroneously gave jury instructions on implied and apparent authority; erroneously gave other instructions that allowed the jury improperly to find Stanbury had overcome Sigal's qualified privilege by a showing of mere negligence; and erroneously refused to give an instruction on "corporate malice" that would have permitted the jury to find Sigal liable only upon a showing that Sigal had authorized or ratified Littman's conduct; and (5) the evidence, in any event, was insufficient to sustain the award of damages in the remitted amount of $250,000. Stanbury cross-appeals, contending the trial court abused its discretion in ordering the remittitur. We affirm.

I. FACTS AND PROCEEDINGS

Stanbury worked as a project manager for Sigal from May 1984 to June 1985. According to Sigal's personnel manager, Pamela Heiber, Sigal terminated Stanbury's employment because he "was not doing his job correctly." Sigal, however, told Stanbury he was let go for "lack of work or reduction in work." According to Heiber, "we felt sympathy for Ken because of his age in life" (he was 63 when Sigal terminated his employment). Stanbury contacted Ray Stevens, a previous employer and Regional Manager at Daniel Construction, to find out whether any work was available. Some time later, Stevens called Stanbury about employment as a project manager on the Pentagon City project. Stanbury was eventually offered the job subject to approval by the owner of the project, Lincoln Properties.

William Janes, a Lincoln Properties general partner, had responsibility for investigating Stanbury's employment references. Janes called David Orr, a former Sigal project executive, who suggested that Janes contact Paul Littman, a current Sigal project executive. Janes did so, and Littman later memorialized the conversation:

claimed David had told him not to hire Ken and asked me what I thought. I told him.

1) Ken seemed detail oriented to the point of losing sight of the big picture.

2) He had a lot of knowledge and experience on big jobs.

3) With a large staff might be a very competent P.M. [project manager].

4) Obviously he no longer worked for us and that might say enough.

These paraphrase what I said nearly word for word.

At trial, Littman acknowledged and Stanbury confirmed that Littman had made these statements without having supervised, evaluated, read an evaluation of, or even worked with Stanbury (other than seeing Stanbury in the halls at the office). According to them both, their contact was entirely casual. More specifically, Stanbury testified without contradiction that he had talked to Littman only once during Stanbury's fourteen months with Sigal, and that this conversation was a general Discussion about Stanbury's previous job. According to Littman, in evaluating Stanbury for Janes he relied entirely on the "general impression had developed" from "hearing people talk about [Stanbury's] work at the job", perhaps at "casual luncheons" or "project executive meetings" or "over a beer on a Friday afternoon." *fn1 Littman did nothing to verify the second-hand knowledge he had acquired about Stanbury. At trial, he could recall no facts or work-related incidents that would support the impressions he reported to Janes. When asked where his information about one of Stanbury's projects came from, Littman testified that "there aren't any real specific instances I can point to. I think it was a general opinion I had just developed in the year or two had been there." Littman thought that his opinion "possibly" came from "hearing people talk about [Stanbury's] work or job."

In contrast with Littman's acknowledgments at trial that his information about Stanbury was limited to vague hearsay, Janes testified at trial that Littman appeared to have knowledge of Stanbury's performance -- indeed, that Littman told Janes he had worked with Stanbury on a project. Janes further testified that he could not recall whether Littman had acknowledged never supervising or seeing an evaluation of Stanbury. Littman's trial testimony substantially corroborated Janes' account of his interaction with Littman. Littman testified that Janes knew Littman was a project executive (who would supervise a project manager), that Stanbury was a project manager, and that Littman did not tell Janes he had never supervised, worked with, evaluated, or read an evaluation of Stanbury even though Littman knew Janes wanted to speak with someone who had "interacted" with Stanbury. Littman also testified that, although he lacked explicit authority from Sigal to provide employment references, it was common in the construction industry for someone in his position to do so.

Although the impact of Littman's statements on Janes was disputed at trial, *fn2 Daniel Construction did not hire Stanbury for the Pentagon City project or for any other project. According to Stanbury, Stevens told him that Daniel Construction had not hired him because Lincoln Properties would not approve him. Stanbury further testified that, according to Stevens, Lincoln Properties (presumably Janes) had made "serious negative comments" about Stanbury and that Daniel Construction would have hired him but for Lincoln Properties' disapproval. Stanbury concluded, after further contacts, that Daniel Construction would not consider him for other projects because of Lincoln Properties' negative impression attributable to Littman's comments.

Stanbury did not find employment until April 1986, when Mergentine-Perini Corporation hired him at an annual salary of $27,000 (he had received unemployment compensation from June 1985 to April 1986). In July 1987, Stanbury resigned from Mergentine because his wife no longer could work and they no longer could afford to live in this area on his salary. They moved back to Pennsylvania. In September 1988, Stanbury began working at Holicong Hardware as an independent contractor at $6.00 per hour.

Stanbury filed this lawsuit in December 1986 claiming (1) defamation, (2) tortious interference with business relations, (3) negligence, and (4) breach of contract. Specifically, he claimed damages for loss of employment, wages, and benefits totaling $250,000 and damage to his professional reputation and standing, as well as humiliation and mental anguish, totaling $500,000. In his pretrial statement, Stanbury specified $210,000 as damages for lost wages. Sigal moved for summary judgment, which the trial court denied. After trial began, the court allowed Stanbury to amend the complaint to request compensatory damages for loss of reputation, embarrassment, and humiliation totaling $500,000. After presentation of Stanbury's evidence, the trial court granted Sigal's motion for directed verdict on the counts alleging negligence and breach of contract, and specifically ruled that the negligence count was subsumed under the defamation count. At the close of all the evidence Sigal moved, once again, for a directed verdict, which the court denied.

Over objection, the trial court instructed the jury on negligence, as well as on implied and apparent authority, and refused to instruct the jury on "corporate malice." The jury returned a plaintiff's verdict for $370,440.

Sigal moved for judgment notwithstanding verdict and, in the alternative, for a new trial or a remittitur. The trial court denied a judgment n.o.v. and a new trial but ordered Stanbury to accept a remittitur of $120,440 for damage to his career (leaving a total award of $250,000) or a new damage trial. Stanbury accepted the reduced award. Sigal filed a timely notice of appeal, and Stanbury cross-appealed as to the remittitur.

II. APPLICABLE LAW

The parties agree that Virginia law governs this case. The trial court apparently accepted this proposition, but the record does not make clear why Virginia law should apply. Furthermore, although Virginia law resolved the summary judgment motion, the parties and the court did not look to Virginia in all instances. For example, no one objected to the trial court's use of the District of Columbia's standard jury instruction for scope of employment, even though Virginia caselaw indicated a somewhat different -- although similar -- formulation. Compare Johnson v. Weinberg, 434 A.2d 404, 408 (D.C. 1981), with United Bd. of Carpenters & Joiners of Am. v. Humphreys, 203 Va. 781, , 127 S.E.2d 98, 102 (1962), cert. denied, 371 U.S. 954, 83 S. Ct. 509, 9 L. Ed. 2d 501 (1963). In fact, aside from the trial court's failure to give a "corporate malice" instruction, the choice of law was not in issue at trial. With this one exception, the parties do not fault the trial court's choice of law for instructional purposes, and thus, overall, they apparently agreed on the law which the trial court applied (perhaps because there are few discernible differences between Virginia and District of Columbia defamation law). On the other hand, it is important to note that on the significant issue of defining and applying the "qualified privilege" which a defendant can lose upon a showing of "common law malice" -- as discussed later in Part IV -- the trial court, and this court on appeal, employ the Virginia definitions set forth in the court's elaborate jury instruction. See infra note 18. In sum, we look to Virginia law for resolution of this case where the parties and the trial court have done so, but otherwise we feel free to rely on this court's previous decisions, in addition to Virginia caselaw, where we perceive no material differences in treating common law issues in the respective jurisdictions.

III. OPINION OR FACT?

Sigal first challenges the trial court's refusal to grant a judgment n.o.v. on the ground that the court erroneously characterized Littman's statements as purported facts, not opinions. *fn3 This argument is attributable to Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789 (1974), where the Supreme Court stated in dictum:

Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of Judges and juries but on the competition of other ideas. But there is no constitutional value in false statements of fact.

Recently, however, in Milkovich v. Lorain Journal Co., 497 U.S. 1, 110 S. Ct. 2695, 111 L. Ed. 2d 1 (1990), the Supreme Court ruled that freedom of expression "is adequately secured by existing constitutional doctrine without creation of an artificial dichotomy between 'opinion' and fact." Id. at 2706. The Court said, in effect, that the lower courts had misinterpreted the Gertz dictum:

Read in context, . . . the fair meaning of the passage is to equate the word "opinion" in the second sentence with the word "idea" in the first sentence. Under this view, the language was merely a reiteration of Justice Holmes' ...

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